What is an Audit and Why It is Important for a Company?

The audit plays a very important role in a company: it reviews the accounting, administrative, labor, etc. procedures of a company and verifies that certain previously established criteria are met.

James Liggett CPA, who has decades of experience in this field, defines the concept of auditing as the process by which a company or independent professional (auditor) is hired to collect accounting information.

This information, as specified by Liggett CPA is valuable to verify that the company being audited has complied with the accounting standards.

 



What is an auditor?

 

As it was explained by Liggett CPA, who has been operating for more than 3 decades in the area of public accounting, the auditor is a trained person with enough experience in the field. His experience makes the auditor able to review and verify that the accounting data, provided by the audited company, really corresponds to the activity that it has been carried out.

At the end of the audit, the auditor has to write a report determining the degree of veracity and clarity that the organization has in accounting. That is, if all the accounting movements that the company has made have been reflected in the accounting books and if everything that appears in the accounting books has been carried out by the company.

 

Tasks of an auditor


Liggett CPA, who holds nearly 3 decades of valuable experience, which encompasses providing accounting, audit and management consulting services to a wide variety of companies, shares the main tasks of an auditor:

·       Reviews the accounts in order to see if the company has used its resources efficiently and effectively.

·       Reviews and verifies the different reports offered by the company on its economic activity and verifies that it is a true image of it.

·       The audit and, therefore, the auditor has to be totally independent. This is essential to legitimize the process and reflect reality.

·       Reports the problems that the company is having at the moment.

 

The importance of an audit for a company?

 

First, as claimed by James Liggett CPA (for more info follow him on Twitter), a company has to demonstrate that the use of its resources is efficient, since there are people who depend on the activity it carries out (for example, creditors or its own workers).

Second, companies have to deal with all legal regulations such as paying taxes (Corporation Tax) in a faithful way. Finally, the audit implies giving confidence to future creditors that the company may have.

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